Cytochrome P-450 (50 pmoles/mg) and NADPH cytochrome c reductase activity (10 pmoles/min/mg) were found in the microsomal fraction of rabbit bone marrow. Rabbit bone marrow microsomal fraction converts 3H-benzene to 3H-phenol. The metabolism of benzene to phenol requires the presence of oxygen and reduced triphosphopyridine nucleotide (NADPH). An atmosphere of carbon monoxide and oxygen inhibits phenol production by 80%. In these experiments 3H-benzene also covalently bound to marrow microsomal protein. As was true for phenol production, the covalent binding also required the presence of NADPH. These results indicate the participation of rabbit bone marrow cytochrome P-450 in the metabolism and activation of the hemopoietic toxin benzene.